Apple overcame a bleak economic climate to turn a $66 million profit and finish slightly ahead of analysts' expectations for the fiscal fourth quarter. And while the company's solid performance was greeted warmly by investors, don't expect Wall Street to get too excited over Apple's immediate prospects.

The reason? Investors hate uncertainty. And when it comes to looking ahead to the end of 2001, retailers and computer makers--Apple included--can offer little besides uncertainty.

There's nothing uncertain about Apple's performance for the three months ended September 30. The company earned $66 million, or 19 cents a share (18 cents if you exclude one-time gains from investments). While that's a 61 percent drop from what Apple made a year ago, it's still better than the 16 cents a share analysts were expecting the company to report. Apple reported sales of $1.45 billion for the quarter, down 22 percent from last year, but in line with expectations.

"We're very pleased to have delivered solid results in what has been a very challenging environment," Apple Chief Financial Officer Fred Anderson said.

Apple had other things to be pleased about in the last three months. It saw its gross margins--a company's gross profit divided by sales--increase to 30.1 percent from 25 percent a year ago. Apple also sold 251,000 iBooks, a 182 percent jump from fourth-quarter iBook sales in 2000.

"I actually thought they did very well," said Brett Miller, PC analyst for A.G. Edwards & Sons. Apple lives and dies by its products, Miller said, and currently "it's a pretty strong product line, with the exception of the iMac.

It's the coming months that's making Apple uneasy. Analysts were expecting the company to earn 16 cents a share on sales of $1.6 billion in the three months ending December 31, according to market research firm Thomson Financial/First Call. But on Wednesday, Anderson would only forecast earnings of at least 10 cents a share on sales of at least $1.4 billion.

The culprit? Uncertainty about how much consumers will spend this holiday season in the wake of the September 11 terrorist attacks and amid a slumping economy.

And for good reason. Historically, monthly sales in September top those for August. Not surprisingly, that wasn't the case this year. Fourth-quarter sales fell 2 percent from the previous three months ended June 30.

Apple's strongest sales the past two quarters have come from the education segment, as Mac users snapped up the redesigned iBook. But the education buying cycle typically ends in the fall, leaving consumers center-stage during the December quarter.

"The consumer needs to show up," Anderson said.

Already, shaky consumer confidence is being felt on one front--Apple's newly opened brick-and-mortar stores. Anderson said the stores saw falling sales in the aftermath of the terrorist attacks. Because of that, Apple now expects the stores to lose money during the December quarter; earlier, the company had predicted its stores would break even by the end of 2001. Despite all that, Apple is sticking with its goal of opening 25 retail outlets by year's end.

Still, investors responded favorably to Apple's earnings picture. Despite the uncertain outlook, Apple stock rose as much as a dollar a share in Thursday morning trading. Miller thinks that could be because Wall Street already expects a weak December quarter and Apple's historically conservative approach to earnings forecasts.

"They're setting a bar that's low enough to trip over rather than jump over," Miller said.

As uncertain as the next few months will be, Mac fans can at least take solace in the fact that Apple is pleased with the products it has in the pipeline. Research and development spending increased 13 percent year over year. That's allowing the company to introduce what Anderson called "some truly great hardware and software" over the next year, including "a groundbreaking foray into the digital device arena" at an
Apple press conference
slated for next Tuesday.

Apple offered plenty of other news to cheer investors Wednesday. It reported ongoing market share gains in education, tripling iBook sales in that segment during the September quarter. The company is now fully stocked on iBooks with the combination DVD-ROM/CD-RW drive, a popular configuration that had been in short supply for most of the quarter. And Apple's balance sheet remains strong, with more than $4.3 billion in cash.

Unfortunately, uncertainty remains strong, too. And that's not likely to change any time soon.